Art Laffer is the economist behind what became known as “Reaganomics” — a series of tax cuts and economic policies that led to the boom days of the 1980s.
However, at 81, he still remembers the “stagflation” that Jimmy Carter’s administration produced in the late 1970s, before the Republicans took back the White House. He knows grim economic times when he sees them. And, in a speech Wednesday, he called Democratic claims that inflation numbers are about to improve “nonsense.”
According to National Review, in remarks at the Young America’s Foundation’s National Conservative Student Conference in Washington, D.C., Laffer said there was no way President Joe Biden’s administration would avoid double-digit inflation numbers before the midterms.
And yet, he saw a silver lining to it all.
(Here at The Western Journal, we’ve chronicled how the Biden administration’s free spending and problematic energy policies have led to record inflation numbers — and how they’re unlikely to be reversed anytime soon. We’ll keep bringing America the truth. You can help us by subscribing.)
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Laffer’s remarks came one day before the GDP numbers for the second quarter of 2022 were set to be released. The Biden administration has already drawn derision for trying to redefine what a recession is — two quarters of negative GDP growth — because the first quarter was negative and the second quarter is likely to be, too.
The famed economist, however, said it wasn’t even necessary to look at the second-quarter numbers to realize what was up with the economy.
“We are already in the middle of a recession here in the U.S.,” Laffer said, noting that there were half-a-million fewer people employed now than there were in February of 2020, the last month before COVID-19 lockdowns.
Is Joe Biden responsible for the dire shape of the economy?
Laffer went on to say this was “one of the worst-performing economies I have ever seen.”
And, when it comes to the issue of inflation, he had a dire warning: Buckle up, America.
“There is no chance from here to Sunday, frankly, in my view of the world, that we aren’t going to see inflation pop up to above 10 percent by the time we get into the election,” he told the student group.
“There is no way that the Fed can do anything in the near term that would, in any way, shape or form, tamp down that inflation in the system. It’s just not going to happen,” he added. (The Federal Reserve raised interest rates by 0.75 percent while he was giving his remarks, it’s worth noting.)
In June, the inflation rate sat at 9.1 percent — the highest number of Biden’s presidency, according to Bureau of Labor Statistics data.
And as for the Biden administration bragging about lower gas prices? Laffer actually said that was a bad augury for where the economy is going.
Gas prices have declined by an average of 60 cents per gallon over the past 38 days.
Five straight weeks of gas prices coming down.
— President Biden (@POTUS) July 22, 2022
Make that 65 cents down over 40 days. https://t.co/js2oPq5Z1W
— President Biden (@POTUS) July 24, 2022
For American families looking for a little more breathing room, these savings matter. pic.twitter.com/IdDv2JGXAD
— President Biden (@POTUS) July 25, 2022
“One of the real problems of gas prices,” Laffer said, “is that, when you’re going into a recession, copper, lumber, gas and a lot of other products will fall going into that. That is exactly what you’re seeing now. We have one hell of a bad economy.”
Indeed, MarketWatch noted analyst Brian Milne said that “demand weakness against historical seasonal strength is pressing retail prices lower.” In other words, Americans were traveling — and presumably spending — less than in summers past due to the high price of gas.
“Government data show gasoline consumption consistently below year ago since early June, and the difference has widened. For the four weeks through mid-July, gasoline consumption is 720,000 barrels a day, or 7.6 percent, less than year ago,” Milne said.
So, the silver lining? As National Review’s Charles Hilu reported, Laffer says it reminds him of Carter’s debacle of a presidency — and, in the long run, that’s a good thing for conservatives.
“After describing his ideal economic platform, Laffer drew parallels to the years just before the 1980 election, in which Reagan defeated Jimmy Carter, who was unpopular due to the combination of low economic growth and high prices, which we call stagflation,” Hilu noted.
“Though there was a dramatic blue wave in the 1976 election after Reagan lost the Republican primary to Gerald Ford, voters saw the unfortunate effects of big-government policy, and they voted accordingly in the next election, allowing conservative economic policy to shine forth, and the same can happen now. “
“I think today is 1978 all over again. I was very depressed six months ago, but now I’ve, all of a sudden, seen the coming of the light. I have not been this optimistic in ages,” Laffer said.
That may be a reason for optimism in the long term. In the short term, American families have felt the dual shocks of COVID-19 lockdowns and the Biden administration’s failed economic policy.
Inflation certainly isn’t “transitory” anymore — and, if the architect of Reaganomics is right, it’s going to get worse before it gets better.
